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MTD Digital Record-Keeping: What You Actually Need to Keep

Q: Can I keep paper records and just enter them digitally later?

No, MTD requires each transaction to be recorded digitally at, or close to, the time it happens, using compatible software — you can't keep paper records all year and batch-enter them just before a quarterly deadline, as that defeats the purpose of digital record-keeping.

Q: Does a spreadsheet count as digital record-keeping?

Yes, as long as it's combined with HMRC-recognised bridging software that can transmit your quarterly figures directly to HMRC. A standalone spreadsheet with no bridging software doesn't meet MTD requirements on its own.

Q: What details do I need to record for each transaction?

Typically the date, amount, and category (income or expense type) for each transaction, kept digitally as it happens rather than reconstructed later from memory or paper receipts.

Q: What happens if my digital records aren't good enough?

HMRC can penalise inadequate record-keeping separately from late submission penalties, and poor records make it harder to defend your figures if HMRC ever queries your quarterly updates or Final Declaration.

What compliant digital records look like, and what still trips people up.

Short answer: you need to record each business transaction digitally, at or close to the time it happens, using MTD-compatible software or a spreadsheet plus bridging software. Paper records kept all year and typed up later don't meet the requirement.

What "digital records" actually means

MTD requires you to capture the date, amount and category of each transaction digitally, close to when it happens — not reconstruct everything from a shoebox of receipts once a quarter. This is the biggest behavioural change for people used to doing their bookkeeping in one annual push before their Self Assessment deadline.

What counts as compliant

Dedicated accounting software that's HMRC-recognised for MTD — records transactions and submits quarterly updates directly
A spreadsheet plus bridging software — you keep records in a spreadsheet, and separate bridging software pulls the figures and submits them to HMRC in the required format

A spreadsheet on its own, with no bridging software to submit the data, does not meet MTD requirements — you still need something that can transmit the figures digitally to HMRC.

What still trips people up

Keeping paper receipts all year and batch-entering everything just before the deadline — not really "digital record-keeping" as required, even though the final submission is digital
Assuming a basic spreadsheet alone is enough — it needs bridging software to actually transmit to HMRC
Missing transactions from cash sales or informal payments that don't automatically appear in bank feeds

Worked example

Dev runs a small self-employed landscaping business. Instead of keeping a shoebox of receipts, he logs each job's income and each material purchase into a spreadsheet the same week it happens, using bridging software to submit his quarterly totals to HMRC. This keeps him compliant and means his Final Declaration is a quick confirmation rather than a scramble.

Getting started

Choose between dedicated accounting software or a spreadsheet-plus-bridging-software setup — see Spreadsheet vs Software for MTD
Start logging transactions digitally now, even before you're mandated, using our free Expense Tracker
Build a weekly habit of entering transactions rather than leaving it all to quarter-end

MTD: Spreadsheet vs SoftwarePros, cons and costs compared Expense TrackerStart digital record-keeping today, free MTD for Sole TradersThresholds and how to get ready MTD Quarterly DeadlinesThe exact dates for every quarter

Sources: GOV.UK — Making Tax Digital for Income Tax. This page is general guidance, not personalised tax advice.

Frequently asked questions

Can I keep paper records and just enter them digitally later?▾

No, transactions need recording digitally at or close to the time they happen using compatible software.

Does a spreadsheet count as digital record-keeping?▾

Yes, if combined with HMRC-recognised bridging software that transmits your figures to HMRC.

What details do I need to record for each transaction?▾

Typically the date, amount, and category for each transaction, recorded digitally as it happens.

What happens if my digital records aren't good enough?▾

HMRC can penalise inadequate record-keeping separately, and poor records make it harder to defend your figures if queried.